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CANADA'S ECONOMIC RECOVERY TO SLOW IN 2011

OTTAWA, Jan. 18 /CNW/ - Canada's economic growth will remain sluggish
this year until more vigorous private sector investment and household
spending resumes in the United States, according to The Conference
Board of Canada's Canadian Outlook - Winter 2011.

"U.S. consumer spending and business investment are improving, due in
part to on-going policy stimulus. But they are so far below normal
levels that this growth has not been able to spur the U.S. recovery
into a gallop. Moreover, a resolution to the European debt crisis
remains critical to keeping the U.S. and global economy on a path of
recovery," said Pedro Antunes, National and Provincial Forecast.

In Canada, economic growth has lost much of its vigour as households and
governments have become overextended. After advancing by 2.8 per cent
in 2010, real gross domestic product (GDP) will grow by only two per
cent in 2011, down 0.5 percentage points from the Autumn 2010 outlook.

Household spending lifted Canada's economy out of recession, but the
exuberant spending in late 2009 and early 2010 faded by the end of the
year. Mounting consumer debt is forcing Canadians to trim spending, and
sizable federal and provincial deficits will result in a more austere
period of public spending. Household spending is expected to rise by
2.6 per cent this year. Job creation will remain modest in the first
few months of the year, resulting in less than 1 per cent growth in
real after-tax income in 2011. In addition, the public sector is
expected to contribute very little to economic growth over the
foreseeable future.

A positive effect of a strong Canadian dollar, which averaged just over
US$0.97 in 2010, is the rebound in business investment in machinery and
equipment. Prompted by the high dollar and increased business
confidence, capital investments rose by 14 per cent in 2010, and they
are forecast to post double-digit growth again in 2011. On the other
hand, the strong loonie will limit the recovery in Canadian exports to
the United States. The Canadian dollar is expected to remain relatively
stable in 2011, hovering near parity throughout the year.